Gina Rinehart’s House of Hancock soap opera rolls on with Fairfax sale
|01/07/2018||Posted by admin under 南京夜网||
Gina Rinehart and hjer daughter Ginia Rinehart. Photo: suppliedGina Rinehart’s exit from Fairfax merely a matter of waning interestGina Rinehart’s Hancock Prospecting takes farewell swipe at Fairfax MediaGina Rinehart sells out of Fairfax Media
“She knows I am here to welcome her back into the Hancock family once the advisers who’ve done her reputation so much damage have gone,” says Gina Rinehart’s estranged son John Hancock.
Hancock’s comments followed news that his mother was no longer Fairfax Media’s biggest shareholder after selling her entire stake on Friday night.
The decision to dump the entire 14.9 per cent stake on Friday night was timed exquisitely.
Besides the media stock hitting a price that enabled her to make a face-saving $5 million profit on her investment, it freed up $305 million ahead of the opening of the $10 billion Roy Hill iron ore mine in Western Australia’s Pilbara amid plummeting iron ore prices and reports of safety issues at the mine.
In the past few weeks there have been reports of a crane tipping over during a safety demonstration test and in January Fairfax media reported that Roy Hill had been served with two prohibition notices from the West Australian Department of Mines and Petroleum. The notices followed a number of “serious incidents” reported at the mine in the past year involving cranes and elevated working platforms.
Hancock gave his mother the idea to buy into Fairfax shortly after she bought a 10 per cent stake in Ten Network Holdings. It was late 2010 and she was planning to buy a stake in The West Australian newspaper, which is dominated by billionaire Kerry Stokes. “She picked up the phone and said, ‘Jay [Newby, the chief financial officer of Hancock Prospecting], don’t buy The West tomorrow, let’s buy Fairfax instead'”.
The sale of Fairfax has prompted speculation about her commitment to Ten, particularly after she quit the board in November.
She has lost a fortune on her Ten investment, prompting her son to say: “Whichever adviser recommended the investment in Ten needs to go.” A soap opera
On a personal level, the decision to quit the register two weeks before Fairfax releases its results, along with a statement from her right-hand man John Klepec, the chief development officer of Hancock Prospecting, that “should the Fairfax Media leadership change, we may consider a future role in the company”, did the trick of diverting some public attention on the eve of a heavily promoted two-part mini-series, The House of Hancock.
Rinehart is fiercely private and would prefer publicity about her business accomplishments, something she has never been shy to point out, rather than her personal life, which at various times looks like something akin to a soap opera.
That the TV series has been released during the ratings season, with trailers highlighting the Rose Porteous era of lavish spending and litigation, would be cringeworthy for Rinehart.
Nine Network took the precautionary step of not releasing any preview DVDs in case Rinehart, Rose or Willie Porteous attempted to injunct it. Instead, journalists were invited to preview the TV series on the premises of Channel Nine.
The series refers to Rinehart as the richest woman in the world, a title bestowed on her in BRW’s 2012 Rich List when iron ore prices were almost 65 per cent more than what they are today. Last week Forbes released its version of the Australian rich list, estimating her wealth at $15 billion, down $8 billion in 12 months.
She may no longer be the richest woman in the world but she is the richest person in Australia – and one of the most controversial, particularly following a breakdown in relations between at least two of her four children. Epic battle
Three of Rinehart’s four children – Hope Welker, John Hancock and Bianca Rinehart – took action to remove her as trustee of the multibillion-dollar Hope Margaret Hancock Trust in September 2011, alleging “deceptive, manipulative and disgraceful conduct” in relation to her management of the trust. (Hope withdrew from the legal action and settled with her mother after a marriage breakup and financial trouble).
Rinehart voluntarily stepped down as trustee towards the end of the trial, leaving the court to appoint a new trustee. The trial ended 16 months ago, prompting speculation that a judgement is imminent.
It has been a high stakes and epic battle of power and control. The trust owns almost one-quarter of Hancock Prospecting and was set up for the children by their grandfather Lang Hancock in 1988 for their “education, advancement and benefit”. The trust included the mining tenements on which the Hope Downs and Roy Hill projects are founded.
The trust was due to vest on September 6, 2011, when the youngest child Ginia turned 25, giving them financial independence.
Three days before, Rinehart wrote a letter to each of her children warning them they would face a capital gains tax bill that would bankrupt them if the trust was allowed to vest.
Besides giving an insight into the fraught relationships between this intensely private family it gave the legal fraternity a rare chance to scrutinise private family trusts, particularly discretionary trusts.
It also gave university courses studying family succession planning a fascinating case study about what can go wrong when the matriarch or patriarch believes their children are “manifestly unsuited” and don’t have “the requisite capacity or skill or the knowledge, experience, judgement or responsible work ethic” to manage it.
In Hancock’s case, he had been told by his grandfather just before he died that he would one day run Hancock Prospecting.
It explains his motivation for the legal action, and a subsequent case launched by him and Bianca last year, which accuses Rinehart of transferring key mining assets to benefit herself, something Rinehart will fight vigorously. “From the start I’ve said we are doing this to carry out the intentions of my grandfather and for fairness to everyone,” Hancock said in an earlier interview with me.
A key claim in the trustee case revolves around Rinehart’s decision as trustee to demand the voting rights to the children’s shares in return for extending the vesting date of the trust from September 6, 2011 to 2068, otherwise they’d be bankrupted by a massive capital gains tax bill. Explosive email
Some of the emails released during the court case were explosive, including warnings from Jay Newby to Hancock that he would be hunted down like Christopher Skase unless he ceded control of the trust to his mother. In one email he wrote: “Remember what happened to Skase when he tried to escape being brought back to Australia when bankrupt?” (In 1991 Skase became a fugitive when he defected to Spain after his business collapsed.)
Hancock later received a private binding ruling from the Australian Taxation Office that said no capital gains tax was payable by the beneficiaries on vesting of the trust.
A file note made by a senior Hancock Prospecting staffer of a phone call he made with a legal expert on April 20, 2011 – months before the trust vested and the letter warning of a CGT event – says “there is no CGT event on the vesting of this trust” and “he is certain – he did his PHD in CGT treatment of trusts”.
Where it will end is anyone’s guess, but the legal costs are mounting, as Rinehart is yet to pay their legal costs on an indemnity basis after withdrawing as trustee. For Hancock, “a system needs to be put in place where in certain cases the lawyers themselves face a portion of clients’ costs as well as costs awarded against them, with no recourse to a wealthy client. It would quickly unclog the system of litigation commenced or defended for strategic purposes only. The strategic purpose at play here is for the plaintiffs to run out of money (hence the non-payment and delay) and so be forced to settle unfairly.'” Follow us on Twitter @BusinessDay
This story Administrator ready to work first appeared on Nanjing Night Net.